Sept. 13 (Bloomberg) -- Laura Pendergest Holt, the former
chief investment officer for Stanford Financial Group Co., was
sentenced to three years in prison for obstructing a U.S.
Securities and Exchange Commission probe of a $7 billion Ponzi
scheme at the company.

Pendergest Holt, 39, was sentenced today by U.S. District
Judge David Hittner in Houston. She was the third-highest-ranking executive in the financial services firm Texas financier
R. Allen Stanford built on what the U.S. said was a fraud based
on bogus offshore bank certificates.

“I’m sorry that I was so trusting,” she said in court,
fighting back tears. Referring to Stanford, she said, “He
didn’t deserve my trust. And in so trusting, I harmed others.”

Her statement drew criticism from Assistant U.S. Attorney
Jason Varnado, the prosecutor arguing the government’s case. At
his request, the judge ordered her taken into custody rather
than being allowed to report to prison next month as she asked.

“When it was time to tell the truth, Mrs. Holt chose not
to do that,” the prosecutor said, referring to her interviews
with the SEC. “She corruptly obstructed justice. She stalled.
She delayed. She frustrated their efforts.”

Defense Argument

Pendergest Holt’s lawyer Chris Flood argued for home
confinement or assignment to a halfway house, saying that
federal sentencing guidelines might have left her with as little
as a one-year term instead of the three she agreed to.

Varnado countered that a guideline-based sentence probably
would have been just three months less. She didn’t accept
responsibility for her crime -- which the guidelines reward with
less prison time -- and couldn’t change the agreement at the
last minute, he told the judge.

Flood reminded Hittner that his client admitted
obstruction, not participating in the fraud scheme itself.

“Don’t punish her for the crimes of Allen Stanford,” he
said. “She didn’t plead guilty to those.”

Pendergest Holt faced a trial this month on 21 counts
before agreeing in June to plead to one count of obstruction in
exchange for the 36-month prison term.

Judge’s Letters

Hittner received dozens letters urging him to reject the
plea deal, his clerk said. The agreement required him to accept
or reject it without changing its terms.

Pendergest Holt’s family and friends submitted 22 letters
urging a lenient sentence. Varnado said most portrayed her as a
victim duped by Stanford. That proved she hadn’t accepted
responsibility, Varnado said.

Hittner said he read all the letters and wrote a note to
himself in the margin of one: “Remember she pleaded guilty to
obstruction of justice.”

After the judge rejected her request to report to prison
later to give her time to arrange for the care of her 16-month-old daughter, she was led from the court without being placed in
handcuffs.

Her husband, Jim Holt, angrily confronted prosecutors as
they left the courtroom.

“It’s unconscionable,” he said before Flood prevented him
from saying more.

First Charge

The first of Stanford’s associates to be accused of a
crime, Pendergest Holt was initially charged with obstruction in
February 2009. She was re-indicted along with Stanford and three
others in June 2009.

Stanford, who was convicted of orchestrating and concealing
the fraud scheme in March, is serving a 110-year sentence at a
federal prison in Florida.

He is appealing his conviction and sentence, while a court-appointed receiver marshals his assets to repay investors who
lost more than $7 billion on fraudulent certificates of deposit
at Antigua-based Stanford International Bank Ltd.

Pendergest Holt admitted to lying to investors and to the
firm’s financial advisers, claiming she oversaw a stable of
international money managers who invested the bulk of the bank’s
assets in conservative, liquid assets.

Varnado told Hittner in June that Pendergest Holt was being
allowed to plead to just one count because she wasn’t aware of
the fraud until near the end.

Actual Knowledge

Varnado said during the plea hearing that while Pendergest
Holt told investors and brokers she oversaw the bank’s entire
investment portfolio, she had actual knowledge of just two
portions, worth about 12 percent of the bank’s assets.

The prosecutor said Pendergest Holt didn’t learn until
early 2009, at a meeting of Stanford’s senior staff in a Miami
airport hangar, that the third and largest tier of the portfolio
consisted of overvalued real estate, risky private equity
investments and a $1.6 billion personal loan to Allen Stanford.

Pendergest Holt told Hittner in June that she met with SEC
officials a few days after the Miami meeting to intentionally
stall the agency’s investigation.

“I decided to withhold the information about Tier 3 to
give Stanford -- the company, not Mr. Stanford personally --
time to correct the disclosures, amend them, so we could fall
into line,” she said.

During Stanford’s trial, Pendergest Holt’s ex-boss and
former lover, James M. Davis, the company’s finance chief,
testified they had a three-year affair that ended shortly before
she was named investment chief.

Husband’s Investment

Other witnesses testified she gave $2 million of the bank’s
money to her husband, a former personal trainer, to invest in
his hedge fund.

Besides the prison term, she was sentenced to three years’
supervision after her release. No fine was imposed because she
lacks the means to pay, the judge said. Her assets were seized
by a court-appointed receiver in an SEC lawsuit against her and
other Stanford executives for use in repaying victims.

Jury selection in the trial of two more defendants in the
case, Stanford Chief Accounting Officer Gilbert Lopez and ex-Comptroller Mark Kuhrt, is scheduled for Sept. 28.

The case is U.S. v. Stanford, 09-cr-0342, U.S. District
Court, Southern District of Texas (Houston).